For both the gold and silver markets, Adrian has tabulated the last ten years of closing information from the COMEX. He created graphs plotting the closing spot price on one axis and the number of open interest contracts on the other axis.

The results are shocking. At the lowest prices, which occurred close to ten years ago, changes in the open interest show virtually no difference in the gold or silver spot prices. However, as time progressed, the clusters of spot prices tilt. That means that as the open interest increased, the prices of gold or silver started to rise.

As the graphs get closer to the current day, the correlation between spot price and open interest becomes a horizontal or even negative slope. For instance, ever since the price of silver reached $22 per ounce last fall, further price increases generally correlate with fewer open contracts on the COMEX.

The clearest implication of the silver chart is that once silver surpassed $22 per ounce, the COMEX traders on the short side of the contracts became more aggressive at closing their short positions and less willing to commit to sell new contracts. As the price of silver rose further, this trend became even more pronounced.

In the gold market, the open interest stopped increasing once the price topped $1,300.

These charts show clearly that recently, as gold and silver prices rise, demand is increasing while supplies are diminishing. This was not true ten years ago, when higher prices brought out more supplies.